Investment Management
Review - Issue 6
What's in Issue 6?
Absolute return scorned
Two well-known experts, M. Barton Waring and Laurence B. Siegel, have strongly derided the notion of absolute return investing. Are they right in saying that the term ‘absolute return’ is meaningless and should not be used?
Industry leaders quizzed
Elizabeth Corley and Wolfgang Mansfeld two leading industry personalities, address several important questions related to current issues and controversies and how the fund management industry might evolve.
Computers taking over trading
The fast-growing techniques of algorithmic trading are helping dealers, but will they eventually supplant them? How will the asset management industry benefit?
Indexation revolution
It is wrong to construct equity market indices by weighting stocks by market capitalisation, according to two experts. There are indications that the industry is beginning to take note and spark off revolutionary changes with profound implications for passive management and exchange-traded funds.
Distribution
The implications of the evolving guided architecture regime, for both fund managers and their distributor partners, are set out by Daniel Enskat, managing director of Strategic Insight Global, who are advisors to many of the world’s largest fund management houses.
Best execution: from Sisyphus to Icarus
Jean-René Giraud, CEO of Edhec Advisory, the advisory arm of the leading French business school Edhec, casts his expert eye over the provisions of the Markets in Financial Instruments Directive (MiFID) that relate to the execution of transactions. He highlights several shortcomings and suggests that the industry has a lot of work to do if it is to avoid giving investors an unfounded sense of confidence.
Top priorities in asset management
Mark Bobseine, from his vantage position as president of CutterAssociates, the leading provider of technology solutions to the asset management industry, outlines the top priorities for investment houses in the areas of technology and information provision. He provides an interesting case study of how things can go wrong.
Exchanges on the warpath
The NASDAQ/LSE saga and the NYSE’s approach to Euronext have been very much in the news in the last few months. They are part of a wider pattern.
Real estate funds
Germany is a leader in real estate investment products for the retail investor. This market went through a crisis recently and Wolfgang Mansfeld provides a prognosis of what it means for the future of retail real estate investment in Europe.
Industry shortcoming
Senior executives and well-known consultants slammed the asset management industry at a conference.
Japan westernising?
Japan is on a recovery track, but its fund management industry is still mired in bureaucracy. The question is whether two westerners’ revamping of a leading firm will lead to the rest of the industry following suit.
Financial centres
Three cities in China have established themselves as fund management centres, as have Singapore, Luxembourg and London. The short-term prospects of all six are surveyed. There are implications for which might be the leading global centres in the next few decades.
Boutiques
That the boutique approach to fund management is the best way forward has become a tenet of the industry and the larger houses are looking to acquire some of the more successful boutiques. Does this make sense?
Risks
There are growing worries at the Bank of England about two major developments related to asset management.
Research
The upheavals in research continue and, amidst the progress, major problems are still coming to light, and unbiased research is still hard to come by.
Execution
Research and execution are getting unbundled and it is clear that the execution services received by fund managers involve conflicts of interest. But the industry is finding a way round it.
Multi-managers
Multi-management marches on in many parts of the world, including Japan.
Shareholder activism
Shareholder activism increases insider-trading dangers, as illustrated by a scandal has recently come to light.
Portable alpha
Is the portable alpha technique likely to have lasting value?
Indexation
A pension fund has switched to fundamental indexing
Structured products
The US is still backward in the arena of structured products investing, but might this change?
Investment banks and fund management houses are fighting head-to-head in this asset class, but there are examples of cooperation.
Derivatives
Warren Buffett has taken a big bet on derivatives. Is he being inconsistent? How are other fund managers using derivatives?
Pensions in Japan
The Japanese pension system was devised for an earlier, stabler era, and now badly needs reforming. What needs doing and who might do it?
Hedge funds
The best of the breed of hedge fund managers are continuing in their pioneering ways.
Hedge fund regulations and practices are under scrutiny.
Whether funds of hedge funds add value is a controversial issue. The pros and cons are reviewed, and future prospects examined.
How are hedge funds doing in Japan?
The future of the hedge fund industry in several respects is considered and the potential dangers it poses to the wider economy are discussed.
Private equity
As the boom in private equity continues, positives and negatives accumulate.
Real estate
Derivatives are being introduced into US real estate not only for the commercial sector but for the much trickier homes market as well.
Infrastructure funds
Infrastructure investment has become a bandwagon and, as with all bandwagons, is experiencing temporary excesses. There are also structural changes and the US, hitherto backward, holds much promise.
Snippets
High potential by-product … Hedge funds support more start-ups … Some interesting PFI examples … Top 10 hedge funds …
Statistical perspectives